Marin real estate prices continue upward

This house at 437 Hickory Lanein San Rafael is for sale. Home prices are climbing statewide, shutting some out of the market, analysts say. Marin?s July numbers indicate home prices up 21 percent over last year. (Robert Tong/Marin Independent Journal)
Robert Tong

It's up, up and away once again, with home prices in Marin increasing 24 percent from last year to $942,000 in August 2013, while sales increased 14 percent, according to the Marin County Assessor's office.

The office reported that 257 single-family homes sold in August 2013, compared with 244 in August 2012. Condominium prices were up as well, going from $327,450 in August 2012 to $400,000 this August. Seventy-four condos sold, compared with 66 last year, the assessor said.

While the median price dipped from $990,500 in July, Marin real estate agents characterized the drop as normal for August and said the market is continuing to thrive.

"People making their move into a school district typically have done so by the month of August, so we see a slowdown," said Sean Solway, an agent with Pacific Union in Kentfield. The median also decreased between July and August in 2012.

While agents agreed that the market is strong and prices are going up, they characterized some of the price increases as artificial.

"Sellers should not be tempted to add 24 percent to whatever they would have gotten for their houses last year and expect their homes to sell for that amount," said Julie Leitzell, an agent with Alain Pinel in Mill Valley.

"The median has to do with fewer foreclosures and more high-end houses selling," Leitzell said.

Solway agreed. "That's why the increases are so large."

The two were referring to the fact that a year ago, many of the houses on the market in Marin were foreclosed properties, which sell for far less than other homes. Hence, the large number of cheap homes brought down the median. The term refers to the midway point above which half of the houses on the market sell and below which half of the houses sell.

The number of foreclosures on the market has plummeted, which means there are fewer of these distressed, low-end properties in the mix, bringing up the median price.

Bidding wars reminiscent of the real estate boom in the early to mid-2000s reappeared early this year and are still being waged "in the highly coveted locations," Leitzell said. "Good commute locations, good school districts and flat yards."

What's behind the bidding wars? While a number of factors are in play, almost every agent mentioned rising interest rates.

While interest rates are still historically low, the average contract interest rate for a 30-year fixed-rate mortgage with balances of $417,000 or less increased to 4.80 percent from 4.73 percent compared with one week earlier, the Mortgage Bankers Association said Wednesday. Rates for higher mortgages also increased.

As interest rates rise, the amount new homeowners must pay monthly goes up, making it harder to afford a house. Hence, many buyers are racing to secure a property before rates get too high.

"It's advantageous to buyers at these interest rates," said Peter Narodny, an agent with Frank Howard Allen in Greenbrae.

By now, the shift in the market that began last year is firmly in place, said Heidi Pay, chief operating officer of Decker Bullock Sotheby International Realty in Greenbrae.

"It's (real estate) been a good place to put your money for some time. Many people made a lot of money buying at the bottom. But now, people also feel it's a safe place. It's established that the market's on the way up and not fueled by frivolous loans as it was before," Pay said.